Thursday, December 11, 2008

Sam's Club Socialism?

I just finished reading Richard Spencer's review of Grand New Party by Ross Douthat and Reihan Salam. Here's where I get into trouble on these matters: I really like the ideas presented by Ross and Reihan, the populist approach, getting more people invovled, but I have to in the end agree with Spencer--inflation is the silent killer of all these plans, and of much of liberalism in general. Spencer tackles the notion of more people going to college and basically states that the more people who go, the less the value of the degree becomes, and the lower the standards become to even attain the degree in the first place.
Regarding higher education, and the cultural divide between grads and dropouts, Douthat and Salam’s propose a plan that would essential inflate the Bachelors Degree into oblivion. So that more Sam’s Club voters “get in,” the authors throw out the idea of “class-based affirmative action.”
Well I couldn't agree more.

I'm still amazed at the (lack of) quality of many of my former fellow students. And let's face it, the bachelor's degree is the new high school diploma. We'll make it even more worthless if we keep letting more and more students into colleges. This, too, is made worse by the easy money students have access to to get into college regardless of merit--it allows schools to keep jacking up their tuition and their enrollment at the same time. This, I have to say, is the wrong way to fund our universities. It may sound liberal, but I think the better tactic would be to simply actually fund the universities through State budgets (with a little help from tuition) and get rid of all these easily gotten Federal subsidies. We'd have lower tuition but students would still have to actually pay for it or get scholarships rather than merely take on boatloads of debt. In my mind, this is actually a more conservative approach.

Spencer also tackles wage subsidies. He's fairly gentle in his reproach--and exhibits a great deal of admiration for Douthat and Salam--but he lays bare many of the fallacies in their approach:

If there’s a kind of “theme” running throughout Grand New Party, it’s the authors’ total obliviousness to the concept of inflation—that dolling our more of something almost always decreases its value.

This is most obvious with their plan for “wage subsidies.” I think most high schoolers who passed the AP Econ exam could explain to Douthat and Salam that simply giving workers more money inflates prices of everyday items (a classic case of too many dollars chasing too few goods). In this way, there’s no real distinction between, say, giving everyone $10,000 and one million—in both cases prices would jump at a clip reflecting the size of the handout.
This is basically the "good-intentions pave the road to hell" critique. Of course it would be good to have everyone make more money--except that if everyone has more money, prices will simply go up and in the end, everyone will have the same or less money. This is also the problem with continuing in this vein of mass-debt, massive-spending, etc. Everyone feels as though they are prosperous, but that is simply because they can spend a great deal more than they can earn. It's all an illusion. Populist policies can be helpful when restrained, but can be devestating when they begin to cause high inflation. Unfortunately it is almost impossible to restrain populist policies. Entitlement programs like to grow. Just watch this bailout to see what I'm talking about. Throwing money at a problem can work, but not if the money in question is play money. The American dollar is looking more and more like Monopoly money all the time.

It's tricky to know what's best. I'm the first to admit that the more I know, the less I know. That's the paradox of knowledge. Ignorance leads to boldness and blustering, the claiming of certainty sans fact. Knowledge, on the other hand, breeds confidence and uncertainty in a sort of perpetual duel. The more I learn, the more I question.